[RFC] Generate USDC revenue through on-chain BAL covered call lending

Hey zekraken,

Thanks for the extra insights into the past initiatives and for raising some valuable points.

So in the full proposal which is in prod, we’ll definitely go into specific relative strikes, tenors, notional BAL amounts, and will also present some indicative premiums as well as the probability of being cash settled.
I think one thing to consider is we plan to put forward multiple strike levels, so that even on strong moves the chance of getting exercised on all of them would be lower (though still possible).

To touch upon your concerns as well - one thing to consider is that this proposal would be one part of a broader treasury strategy, so even if the upside is reached and cash-settled, it doesn’t mean necessarily you “lost” relative to holding. Maybe the treasury may want to, for instance, sell some on a rally and instead of selling OTC through TWAPs, choose on settling transparently on-chain at a predefined price, which may still fit well into a broader treasury strategy with defined, customizable terms.

Overall it is important for us to be transparent in the proposal and present the payoff in a way where all voters know what exactly what they are voting for (or against)!